Why Do Dual-Class Firms Have Staggered Boards?

48 Pages Posted: 22 Jul 2014 Last revised: 19 Jan 2015

See all articles by Mira Ganor

Mira Ganor

University of Texas at Austin - School of Law

Date Written: July 22, 2014

Abstract

Conventional wisdom regards the combination of a staggered board with a dual-class capital structure as superfluous. However, the incidence of this combination in U.S. firms, identified in this Paper, is not trivial. This Paper considers a few possible motivations for this practice and reports the results of empirical studies conducted on dual-class firms with staggered boards. Significantly, even in the universe of dual-class capital structures, effective staggered boards are associated with lower firm value. These findings suggest that entrenchment may not fully explain the correlation between lower value and staggered boards in single-class firms.

Keywords: staggered board, classified board, dual class, entrenchment, corporate governance, agency costs, boards, directors, takeovers, anti-takeover

JEL Classification: G32, G34, K22

Suggested Citation

Ganor, Mira, Why Do Dual-Class Firms Have Staggered Boards? (July 22, 2014). Available at SSRN: https://ssrn.com/abstract=2469650 or http://dx.doi.org/10.2139/ssrn.2469650

Mira Ganor (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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